The weather across the South is sweltering and is rapidly creating drought conditions. Thermometers in many cities topped 100 degrees this past week, and recent months have been record hot with less than half of normal rainfall.

For many farmers, the high heat and dry conditions are hurting the crops that they’re preparing to harvest.

Cotton, soybeans and peanuts are major crops in many Southern states, and each of those markets is heavily dependent on exports to China. The ongoing trade war and lack of exports to China have kept prices depressed. The recent heat wave is only adding insult to injury for many farmers.

Forecasts are raising hopes for some cooler weather and rain, but some of the damage to the crops can’t be undone.

As of midday Friday, soybeans futures for delivery in November traded for $9.15 per bushel, while December cotton fetched 62 cents per pound. Peanuts aren’t traded on U.S. futures exchanges, but recent USDA reports showed prices near 20 cents per pound, down over 10% from last year.

U.S. economy on edge

Numerous reports released last week showed bad signs for the U.S. economy.

Manufacturing, the service economy and construction are all indicating a slowdown, and U.S. job growth in September was anemic. While few metrics are pointing toward a recession yet, slowing growth is a warning sign that the economy is reaching a peak, much like a roller coaster nearing a standstill as it finishes climbing before a plummet.

Watching these figures and political uncertainty in Washington surrounding the impeachment inquiry led by Democrats triggered many investors to dump stocks last week, dropping U.S. stock markets to a one-month low Thursday.

Markets bounced back Friday as traders grew more hopeful that these worries would prompt the U.S. Federal Reserve to lower interest rates again to boost the economy, repeating a market seesaw pattern that has become increasingly common recently. As of midday Friday, December S&P 500 futures traded for 2,935, while the December Dow had rebounded to 26,400.

Walt and Alex Breitinger are commodity futures brokers in Silver Lake, Kansas. They can be reached at 800-411-3888 or www.paragoninvestments.com.

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